No deal - now what?

July 21, 2012

SARANAC LAKE - Village Mayor Clyde Rabideau says he and other village staff have sent three potential buyers to the Hotel Saranac, all of whom were willing to spend "millions of dollars" to purchase and restore the hotel, but none of the buyers were able to come to terms with the hotel's current manager, Sewa Arora.

Rabideau lays blame on Arora for the demise of the negotiations, the most recent of which fell apart less than a month ago.

"The terms and conditions seemed to change from every meeting, from what they've told me," the mayor said Tuesday. "They all felt ill at ease and eventually left the discussions."

Article Photos

The Hotel Saranac and its iconic rooftop sign tower over Academy Street in the village of Saranac Lake, as seen Thursday morning.(Enterprise photo — Chris Knight)

The former AP Smith restaurant in the Hotel Saranac, as seen in late June, now sits largely empty.(Enterprise photo — Chris Knight)

The Grand Hall of the Hotel Saranac, as seen in late June.(Enterprise photo — Chris Knight)

Chandeliers light the empty Grand Ballroom of the Hotel Saranac, as seen in late June.(Enterprise photo — Chris Knight)

One of the smaller guest rooms at the Hotel Saranac, as seen in late June.(Enterprise photo — Chris Knight)

Two rooms at the Hotel Saranac were combined to make this large suite.(Enterprise photo — Chris Knight)

Arora, whose family owns the Main Street hotel under the name Sardeshwari Enterprises, contends that the potential buyers simply weren't willing to meet his asking price for the hotel, which is currently $2 million, and that's why the talks dissolved.

In the meantime, Arora says he has come up with a different plan for the hotel. He says he wants to convert half of its 86 rooms into independent living for seniors, which he said would maximize unused space in the hotel and help meet a growing need. Village officials met the idea with skepticism and concern.

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Lost icon

This is just the latest chapter in the story of a hotel that was an economic anchor of the downtown and social hub for the community until the Aroras bought it in 2007, but now is seen by many locals as a lost icon.

The hotel's restaurant and bar and pub have been closed for several years. "For lease" signs have hung in the building's front windows for more than a year. Its parking lot is empty of vehicles most days. Downtown merchants say the business they used to get from the hotel's guests has disappeared.

Local residents blame the Arora family, which purchased the property from Paul Smith's College, for the demise of the hotel, but Sewa Arora has said repeatedly that there's no way he could have run the hotel like the college, which consistently lost money on it because it was run as a teaching institution, not a business. Arora has said he had to make his "drastic" changes - cutting personnel costs and closing the bar and two restaurants, for example - to make it profitable.

But those changes, along with what some have called Arora's "antagonistic" way of dealing with people, pushed customers away from the hotel and turned public sentiment against Arora. Now, many people tell their visiting family and friends not to stay there. Groups and organizations that used to meet and hold events at the hotel have gone elsewhere. Bad reviews started showing up on www.tripadvisor.com.

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Village's role

Village officials have tried to rebuild the community's connection to the hotel. Not long after he was elected mayor in 2010, Rabideau befriended Arora, attended his daughter's wedding and hosted the village's first Walk of Fame induction ceremony, honoring Olympian Bill Demong, at the hotel. The response from the public was lukewarm.

That isn't all the village did. Rabideau revealed this week that the village has been quietly sending potential tenants and potential buyers to Arora.

"We have referred a number of potential tenants to Mr. Arora, and we've worked with at least three different interested buyers of the hotel," Rabideau said Tuesday. "We've attempted to refacilitate talks between one of the most qualified buyers and Mr. Arora just recently, but all to no avail. Nothing transpired from any of those referrals or attempts at facilitating a buy."

Rabideau said potential tenants were put off by the condition of the building and the uncertainty of whether Arora would keep it fixed up.

"For the potential buyers, it was a moving target for them every step of the way," Rabideau said. "One of the developers had an MOU (memorandum of understanding) at $1.2 million last year. It was agreed on. But at the day of the signing, it's my understanding that the price got upped," and the deal fell apart.

The mayor wouldn't identify any of the interested tenants or buyers. He was initially reluctant to even reveal that the village had tried to steer potential buyers to the hotel because he was concerned about how it could affect future development deals the village may try to broker. But Rabideau seemed frustrated with how Arora handled the negotiations and said he ultimately decided revealing that was in the public interest.

"I thought about it, and people should know," Rabideau said.

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Asking price

Arora confirmed that the village had sent potential buyers to him, but he wouldn't say who approached him without their permission.

"One person was for real; he had the money," Arora said Wednesday. "We met with him about two, three, four weeks back. He's a local guy."

Arora said the deal collapsed because the potential buyer wasn't willing to meet his asking price, which he said he hasn't kept secret.

"I told them, 'This is my price: two million dollars. Anybody can come in and take it. I'll give you the key tomorrow,'" Arora said.

Arora said he did increase the sale price of the hotel from last year to this year.

"Last year one guy came to me and I asked him for 1.6 (million)," Arora said, "and he came back to me this year, after one year, and I said, 'Do you want to sit down? Two million dollars.' He said, 'The price has gone up?' I said, 'Yes.' Based upon the market conditions, the price goes up and down, just like the stock market."

Is the hotel, which is currently assessed at $1.2 million, according to the town of Harrietstown, worth $2 million? Arora says it is, but village officials don't think so.

"One of the offers was well over a million dollars, which exceeds current estimates that I have heard, given the condition of the building," Rabideau said. "And I can also tell you that one of the potential developers said he would have to keep the hotel closed for up to two years for renovations, and have to change the name of the facility once he was done because the name Hotel Saranac now has a bad reputation on the Internet."

"From what he told me, compared to what I have heard from real estate professionals, I believe he thinks that the hotel is worth more than it actually is," said village Trustee Paul Van Cott, who recently met with Arora. "I encouraged him to continue to work with developers who are interested in buying the hotel to restore it."

For now, Arora said he has no plans to sell unless the offer meets his asking price.

"I'm not going to sell it because I'm making money," he said. "We're not looking actively for a buyer. I've not listed the hotel with any broker. But if the right person comes along at the right price, we'll sell it."

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Arora's plan

While he claims the hotel is making money, it's not making as much as Arora would like. That's one of the reasons why he says he will turn half of its rooms into units of independent living for seniors, a plan he pitched to the Enterprise during a sit-down in late June.

Although he wouldn't reveal the hotel's yearly occupancy rate, Arora said it's less than the 45 percent he says it averaged during the college's ownership. He also said there is 30,000 square feet of space on the ground floor and second floor that isn't being used.

"We have been thinking for a long, long time as to how to use this 50 percent of the rooms, and 30,000 square feet," he said. "We're not going to shut down the hotel part. The hotel will remain a hotel. But how to maximize the space? We thought of creating condominiums or apartments. The third option was to create independent living."

Arora said he hired a consultant, whom he wouldn't identify, who "came to the conclusion that this is the best spot you can ask for for independent living.

"Number one, it's right in the center of town. They can walk out of the building and do their shopping. There's doctors' offices right next door (Medical Associates of Saranac Lake). There are all denominations of churches right on Church Street. They can take a walk and so forth. We came to the conclusion that this will be the best way out of all the options we have to utilize the space."

Arora said the project would create 20 to 25 "high-paying jobs." He said he's looking into finding a management company that would run both the independent living component and the hotel, and he said he's talked to some medical groups that might be interested in moving their medical practices into the hotel's main floor. He planned to meet with North Woods Engineering last week to see if the firm would be interested in developing a plan for the building.

"We have to do a feasibility study," Arora said. "Probably we will convert two floors for the independent living, then keep two floors plus the ground floor and the first floor for the (hotel) guests. We will try to maintain the ballroom as it is. Along with that. we're going to do a major renovation of the hotel: the facade of the building, the rooms, bathrooms, buying new furniture."

Once the conversion and renovation of the hotel is complete, Arora said he'd then pursue one of his original goals when he bought the building: putting a restaurant on its roof.

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Why?

Arora says there's a demand for independent living that could increase his profitability.

"I've been told there's a waiting list on some of the independent living facilities," he said. "We know that we are going to make the money. We've done the rough calculations. We find this is going to be profitable."

Arora also says the change would benefit downtown businesses and could also help improve his sour relationship with the community.

"By utilizing this hotel to maximum capacity, it will be the best thing that can happen to the local merchants," he said. "You'll still keep the icon, at the same time, the traffic will be increased. We are here for the long haul and we are going to invest more money in this property, which will in turn bring more traffic, and hopefully it will bring a little bit of good will to us that we're not here to destroy the hotel, as people have the perception."

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Skepticism, concern

Asked about Arora's plan, Rabideau said it would be "very, very sad to have any part of the use of the hotel building converted to another use.

"I think there's better locations in the village, or just outside the village, for assisted living. Secondly, I'll believe it when I see it. We've heard a lot of talk and a lot of plans. We've not seen anything except the degradation of the hotel since the owner purchased the building, and that's a fact."

"We talked briefly about the new idea to turn the hotel into an assisted living facility or something like that," Van Cott said of his meeting with Arora. "He is a hotel person, so I find it surprising coming from him and wonder whether it is something his family wants to do with the hotel. The bottom line is that they hold all of the cards."

Rabideau said he understands that the hotel is private property and Arora can do with it as he pleases.

"But just like the Empire State Building is a proud part of New York City and it's privately owned, but for anybody to desecrate the Empire State Building would bring the wrath of the Big Apple upon them - the wrath of Saranac Lake may come upon the owner of the Hotel Saranac, because it's part of our town and it's an icon of Saranac Lake."